Corporate Social Responsibility (CSR) is increasingly an essential issue for companies. It is a complex and multi- dimensional organisational phenomenon that is understood as the scope for which, and the ways in which, an organisation is consciously responsible for its actions and non-actions and their impact on its stakeholders. It represents not just a change to the commercial setting in which individual companies operates, but also a pragmatic response of a company to its consumers and society. It is increasingly being understood as a means by which companies may endeavour to achieve a balance between their efforts to generate profits and the societies that they impact in these efforts. This chapter discusses these issues. First, it describes CSR and its core principles. Second, it describes CG and narrates CG‘s convergence with CSR. Third, it highlights how different economies are incorporating CSR notions in their corporate regulation.
The convergence of Corporate Social Responsibility(CSR) and Corporate governance(CG) has helped to develop the standardisation regime. Most global companies have acknowledged this development. They exclusively consider certain of these initiatives to measure their suppliers‘ performance Some of them weed out suppliers from their chains on the results of performance tests based on these initiatives. Using these initiatives they select strategic suppliers to
(a) reduce their transaction costs;
(b) increase their profitability;
c) reduce costs as a result of a reduced need to switch suppliers; and
(d) increase their competitiveness in the marketplace through improved relationships with consumers.
GOI issued the Companies (Corporate Social Responsibility Policy) Rules, 2014 (CRS Rules) which has come into effect from 1 April 2014. Under Section 135 of the Companies Act ,it provides the threshold limit for applicability of the CSR to a Company i.e.
(a) net worth of the company to be Rs 500 crore or more;
(b) turnover of the company to be Rs 1000 crore or more;
(c) net profit of the company to be Rs 5 crore or more. Further as per the CSR Rules,
the provisions of CSR are not only applicable to Indian companies, but also applicable to branch and project offices of a foreign company in India.
Under the rules, Every qualifying company requires spending of at least 2% of its average net profit for the immediately preceding 3 financial years on CSR activities. Further, the qualifying company will be required to constitute a committee (CSR Committee) of the Board of Directors (Board) consisting of 3 or more directors. The CSR Committee shall formulate and recommend to the Board, a policy which shall indicate the activities to be undertaken (CSR Policy); recommend the amount of expenditure to be incurred on the activities referred and monitor the CSR Policy of the company. The Board shall take into account the recommendations made by the CSR Committee and approve the CSR Policy of the company.
The activities that can be done by the company to achieve its CSR obligations include eradicating extreme hunger and poverty, promotion of education, promoting gender equality and empowering women, reducing child mortality and improving maternal health, combating human immunodeficiency virus, acquired, immune deficiency syndrome, malaria and other diseases, ensuring environmental sustainability, employment enhancing vocational skills, social business projects, contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government or the State Governments for socio-economic development and relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women and such other matters as may be prescribed.TSPSC Notes brings Prelims and Mains programs for TSPSC Prelims and TSPSC Mains Exam preparation. Various Programs initiated by TSPSC Notes are as follows:-
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